METALS-Supply fears drive Shanghai aluminium to two-month peak

    (Updates prices)
    By Eileen Soreng
    Jan 6 (Reuters) - Shanghai aluminium prices hit a more than
two-month high on Thursday, driven by higher power prices and
rising supply concerns.
    The most-traded February aluminium contract on the Shanghai
Futures Exchange          closed 2% up at 20,685 yuan
($3,244.55) a tonne. Prices earlier hit their highest since Oct.
27 at 20,835 yuan.
    Three-month aluminium         on the London Metal Exchange
(LME) was down 0.4% at $2,908.5 a tonne by 0820 GMT.
    Aluminium is benefiting from higher coal prices, one
Singapore-based trader said, adding that a supply deficit and
higher energy prices are supporting price resilience.
    Chinese thermal coal futures          were down 0.6% at
697.2 yuan a tonne, having jumped by about 5.5% this week on
supply disruption fears after an export ban by Indonesia. Most
aluminium production in China uses electricity generated by
coal-fired power plants.
    A surge in power and natural gas costs across Europe has
also led to output reductions at smelters in the region.

    Aluminium inventories in LME-registered warehouses
were last at 926,800 tonnes, down more than 50%
since hitting a 1.96 mln tonne high in March last year.

    FUNDAMENTALS
    * LME copper         fell 1.6% to $9,544 a tonne after
touching a two-week trough of $9,530.
    * LME nickel         slipped 1.5% to $20,330 a tonne, lead
        eased 0.2% to $2,282, zinc         was 1.4% down at
$3,537.5 and tin         fell 0.7% to $39,025.
    * Industrial metals came under pressure from a stronger
dollar after minutes from the U.S. Federal Reserve's meeting
signalled a sooner than expected increase to interest rates.

    * ShFE copper          fell 1% to 69,490 yuan a tonne,
nickel          slipped 2% to 149,930 yuan, lead          fell
1.4% to 15,060 yuan and tin          was up 0.1% at 295,350
yuan.
    * Australian diversified miner South32 Ltd          said it
would spend about $70 million to restart the Alumar aluminium
smelter in Brazil with joint venture partner Alcoa Corp       .
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($1 = 6.3753 Chinese yuan renminbi)

 (Reporting by Eileen Soreng in Bengaluru
Editing by David Goodman)